Rating (Empty Properties) Act 2007

Mr. Pope, it is a pleasure to serve under your chairmanship—for the first time, I believe. I congratulate my hon. Friend the Member for Sunderland, South (Mr. Mullin) on securing the debate and on the way in which he has put across his points. He has always been a persuasive friend, and I have probably followed him into the Lobby many times because of the conversations that we have had. He has probably got me into trouble once or twice as well. I take on board my hon. Friend's concerns about the two local engineering companies and the printer company that he mentioned. I apologise for not being a Treasury Minister, but, as he says, I am a Minister at the Department of Communities and Local Government. I am delighted that he has already had some informal conversations with our right hon. Friend the Secretary of State. If he wants to have detailed discussions, I am happy to set up a meeting between my hon. Friend and Ministers in my Department to help to foster the dialogue. I will outline how we arrived at our current position and the reasons why the Government have taken the decisions they have. Ultimately, those decisions are aimed at stimulating the market and ensuring that every property is utilised. Non-utilisation of buildings costs the taxpayer approximately £1 billion a year. I understand why my hon. Friend has raised the issue, and I am very sympathetic to his concerns. As my hon. Friend said, the reforms followed on from recommendations of the independent Barker review into land use planning and the Lyons inquiry into local government. The changes to the empty property rates relief came into force from 1 April this year following Royal Assent to the Rating (Empty Properties) Act 2007, which was scrutinised in great detail during the legislation's progress through the House. The main element of the reforms to empty property rates was to raise the business rates liability of owners of empty properties to 100 per cent. of the full occupied rent. The reforms provided a new zero rate for charities and community amateur sports clubs in respect of any property that they own. They also exempt companies in administration from rates on their empty properties in line with our policy to assist such companies. The reforms were part of a package of measures. However, I understand and sympathise with the fact that they have not helped the engineering firms or the printer company that my hon. Friend talked about. The Government considered that it was right for landlords to receive rate relief for limited periods while they manage their vacancies. The reforms kept the three-month exemption period for non-industrial properties, but replaced the previous total exemption in perpetuity for industrial properties with a six-month exemption period. Let me explain the rationale for the reforms. Our cities and towns occupy very high-ranking positions in the table of the world's most expensive markets for rents. The 2007 King Sturge survey of global rents found that English towns and cities—namely London, Birmingham, Bristol, Manchester and Leeds—occupy five out of the top 10 positions for the world's most expensive total occupancy costs for prime industrial space. Those same towns occupy five out of the top 20 positions for the world's most expensive total occupancy costs for prime office space. Those points were considered during the course of the reviews that my hon. Friend mentioned. High rents might be a sign of companies recognising the attractiveness of locating in the UK and, to some extent, be a marker of how successful we have been. However, while our cities and towns occupy high-ranking positions in the table of the world's most expensive markets for occupation costs, owners of empty properties received a subsidy of £1.3 billion, paid for by other taxpayers. The reforms to empty property rates should reduce the costs of relief to the public purse by £950 million in 2008-09 and £900 million in 2009-10.